Constitutional Court prohibits “supertax” on severance pay

Issues

The Constitutional Court on Monday prohibited further application of Hungary’s 98% supertax on big public sector severance payments, saying that the legislation violated the constitution as well as international agreements.

In the ruling, published on the top court’s website, the body said that the contested law, which was in force until December 30 last year, also ran against regulations aimed at protecting private property.

On January 1, parliament reduced the supertax from 98% to 75%. The tax is paid on severance pay over HUF 2 million for state and local council leaders and managers of state- or local council-owned companies. The threshold is HUF 3.5 million for ordinary public sector employees.

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